Most of the pundits on YouTube, a large Elliott Wave service, and many, many websites have been predicting a crash - with uncertain or awful timing for several weeks. This website resisted the temptation to play with emotions. The recent daily chart of the ES futures is below.
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| ES Futures - Daily - Deep Retrace |
As you can see, they, the pundits, plainly forgot the "crash up", before the "crash down" if there is to be one. Staying very neutral and objective, the sole factor that matters from an Elliott Wave perspective is whether a new high is made or not. The downward wave to A counts best as a five-wave diagonal.
As such, diagonals are certainly allowed to have a deep retrace. I've shown the MACD in this chart, because if a new high is made, it is going to be on quite a divergent reading. But, plain and simple, if the wave goes over the former high, it would invalidate the combination of Minor A, down, Minor B, up, with the expectation of a Minor C, down to follow as a zigzag. This is the problem with diagonal waves. Even if they are counted properly, they can still be ending diagonals, and not leading diagonals. And only time will tell.
For the second day, prices closed up over the daily Bollinger Band. So, that is one problem with the up wave from the viewpoint of the wave continuing. It drops the odds to a very rough 3 - 4% that Tuesday/Wednesday will close over the upper band.
A further problem with this up wave is going to be the put-to-call ratio. On Friday it was in the low 0.40's at 0.44. It will be interesting to see what a day like today does to that ratio again and if it drops into the 0.30's. And remember, sometimes - not always - after a large up day on Monday, Tuesday is the day on which prices turn-around.
We shall see. It all sounds good in theory. Let's see how it holds up in practice.
Have a good start to your evening.
TraderJoe
Interesting. I posted a comment this afternoon that I thought might be timely (just before the downturn), but was apparently censored. Yet, I see our friend "Unknown" seemed to have no trouble posting his/her comments. I can take a hint, lol.
ReplyDeleteI've left the monthly charts of SPX (cfd) and Gold for anyone that might be interested, but have deleted all others.
So, I'll leave you to enjoy "Unknown"'s company. :o)
I censored nothing. Not sure what happened. In general, your posts go through as they are thoughtful.
DeleteSecond that GW, your posts are MUCH appreciated.
Deleteit is interesting that that futures did reach 90% and cash got within a tick. For those that did not count the initial down wave from Sept 2 lower as a 5, I suppose it could be considered an inflection point.
ReplyDeleteHere is the intraday with updated pivots. Price currently traveling sideways with no downward overlap.
ReplyDeletehttps://invst.ly/sg4tw
TJ
Counting a fourth and expecting 3500.00 to hold. Also looking for VIX divergence on any fifth wave up to confirm a terminal structure.
Deletedo you think Gold has started 3 of C?
ReplyDeleteRM:
DeleteDisclaimer, I'm not good at wave counting, especially when it comes to degrees, but looking at the Weekly, I see 5 waves up from the late 2015 lows (1045.4) to the high last August (2089.2).
If you run a Fibonacci Retracement from the 1045.4 low in 2015 up to the 1923.7 high in 2011, then do + and - .1456 from that top, you'll have a band in which longs are at more peril than shorts. (My Think or Swim shows 1795.8 to 2051.6) Following the August high that could not be sustained above that band, I'd be looking for a corrective pattern to the downside.
Thanks very much. Yes, I see 1761 area as a target if this is 3 of C. Gold still is a heavily crowded long trade. More correction should shake out a few dreaming of 10k by next year.
DeleteI see there are a lot of turns around your 1761, so that does make sense.
DeleteIf you use the Fibonacci Extension from the retracement of the beginning sell-off (2089.2 to 1874.2) retraced to 2024.6, then the 161.8 extension takes gold to 1676.7 which is near the bottom of that same trading range.
The 261.8 extension is 1461.7 which is very close to 50% of the larger trading range from the weekly (1484.6). The profile shows higher volume in the 1490-1500 price band - so that COULD mark the area for the final re-trace in Gold.
When the time comes, silver should offer better returns.
Chris Kimble sent a post today, looking at gold from the Euro viewpoint:
Deletehttps://kimblechartingsolutions.com/2020/10/euro-weakness-here-could-spell-trouble-for-gold-silver-bulls/
Based on the 15-min SPY cash, the two counts are equivalent until they are not. (c) = 0.618 x (a), or (iii) = 0.618 x (i). Based on the Elliott Wave Oscillator a fourth wave (iv) is still within range, but not required.
ReplyDeletehttps://invst.ly/sg5y3
TJ
Just fyi - from CNBC:
ReplyDeleteIMF warns of ‘sharp adjustment’ in financial markets despite ‘remarkable’ recovery this year
TJ
Based on overlap, this is now a viable count in the Dow futures. The ES has overlap, too.
ReplyDeletehttps://invst.ly/sg9--
TJ
Would this be a truncated zigzag?
DeleteIt could be Ben.
DeleteMoney flow clearly defending 3500.00 I agree that count is viable, but think it will fall to the more potent variable of liqudity injections...filure of first wave down to decisively breach 3500.00 short term bullish imho...
ReplyDeleteTJ, I'm confused why a new high would invalidate a C coming. Couldn't B go higher in a flat or expanded flat?
ReplyDelete